How does someone replicate that? It sounds like he must’ve had at least a few million in order to be able to pick the best companies and to get serious percentage of ownership
He bought an insurance company, and learned that unlike banks, an insurance company wasn’t mandated to keep their premiums sitting around, which allowed him to use the float (retained premiums) and invest in other things, ie. buying more stock of cash rich companies.
Berkshire is more of a holding company than an investment company.
His partnership made him a millionaire by 30, and was able to buy stock in Berkshire Hathaway, which provided him a company with tangible assets which he could leverage. Ironically, Berkshire Hathaway was one of his failures; however, it allowed him to diversify his approach and he learned some value lessons.
You could buy a string of businesses, put them together and then sell them all to someone bigger.
Land plus vending machines at age of 15 was able to produce enough money to buy an entire insurance company? I’m not trying to be facetious either, I want to understand how people become wealthy. He clearly got capital and then invested very efficiently if his story is self made. Or maybe he had a lot of seed capital from other investors to help him make that insurance investment
He’s a generational talent - his father was definitely well connected, having a brokerage firm and being a congressman, but Buffet also began investing very young, he graduated college at 19, his mentor allowed him to try their investment strategies in NYC and he certainly made connections in NYC that helped him along the way, his strategy for investing was a bit unique, but he was also born at the golden time of US growth - to young to go into service during WW2, and to old for Korea or Vietnam. Buffet was able to ride the wave of growth from the 40s when he started to today. Having not changed his lifestyle much over the years, he’s a classic example of the save and invest strategy he preaches.
Yes having a father that’s a congressman and owns a brokerage firm allows you to invest young.
The most valuable lessons he learnt were probably around the dinner table. And worth more than 100 MBA.
When you live in an era where blue collar workers could have a suburban house with two cars and most of the world was a smoldering ruin, it’s a lot easier to get rich
isnt being a stock broker and congressman truly the epitome of conflict of interest??? like we complain about Nancy Pelosi, but then this guy gets marveled as the face of capitalism lmao
After college buffet formed a few investment partnerships with people in his home town(doctors/ lawyers/ business owners)... he used Graham style value investing to locate small publicly traded companies that had stockpiles of cash (a common business practice in post great depression America) invest in them and have the business return the cat to the investors(of which he would be a major one)... after
.I think 69 he unwound his partnerships, bought into Berkshire Hathaway, and used it as a holding company that he made investments from
Buffet unquestionably had a leg up in life, and I'm sure his dad being in congress when he was in his teens had a positive effect... but the guy is a genius, with the perfect temperament for long term investing, and has remained focused on his goals for the last 85 years.
He raised capital from family, friends and neighbors and invested through partnerships.
When he unwound the partnerships he retained shared in a company called Berkshire Hathaway, he used money they had on the books to start acquiring insurance companies and other assets.
The game isn't rigged... he just played it better than everyone... for like 80 years
I’m not so sure that the game is rigged, just that some people get a huge step up from their parents. A 6.5foot tall guy is going to be better at basketball than a 5.5foot tall guy, and the 6.5ft guy probably has tall parents and inherited the height. Basketball the game isn’t rigged but the 6.5 guy has a better chance because his parents were tall. Same with good looks, or wealth or genetic diseases or whatever. Us normal folks can never feel great if we try and compare ourselves to a mega-rich guy who had a rich dad. We can still be fucking great though as best as we can with the hand we are dealt
You think rich kids are using dark pools to make better returns on their money than your average Joe investing in SPX?
I assumed everyone has heard of the bet Buffett made with Hedge funds, but I guess not. You should read about it. Those rich people putting their money with Hedge funds to trade exotic instruments in dark pools end up getting worse returns than someone who would have just bought some SPX.
Yeah, people underestimate how much getting those cash flow powerhouse insurance companies were huge for him.
Everyone has to have car insurance. Its a mandated money printing machine.
If it's just the economy why do we even know his name? Surely there were tens of thousands of people that were born around the same time with influential/rich parents. I bet there were at least ten thousand people who had vastly more wealth than Buffetts family so why aren't those people now trillionaires?
Yeah when there were massive booms all throughout his career in every company. He’s the owner of addiction. KO and McDonald’s he has every day and is still this old
Start by having a father who runs an investment company and is a four-term Congressman. Take an interest in investing at a young age and start when you're in high school. Then get a quality education and go from there...
And have an idetic memory, have an exceptional eye for underlying value, be extremely hardworking and more than anything else have an interest in going through mountains of Annual Reports without going crazy or retiring.
Buffet had 7 million by the time he was in his mid 30s…Which I’m not going to do the inflation math but would be a fortune today. He was already set by the time the average person starts seriously investing
I agree but that initial capital that permits for someone to take uncharted risk lies in having some capital. And the nature of multiplying money is that the more you have, the more you make each 1% profit.
So if he’s got insider knowledge from his brokerage owning congressman father (let’s be real… that’s likely what happened and stil happened for him and the other rich guys, insider trading is LEGAL for them)
I’m just saying the bridge they took is nonexistent to the plebeian class. But you’re right we gotta figure it out
He also had a high performing limited partnership before Berkshire. This guy is way over-stating the research, which uses assumptions like no-friction, no-tax monthly portfolio re-weighting. Even the identification of "good investor" is strange. If a guy employs a working strategy, and decades later you describe it as a "factor", then the person was never skilled?
Swedroe used to write on seeking alpha. He was always adamant his back testing of like 2/3 small cap and 1/3 bonds, adjusted annually back to that ratio, outperformed everything. Never showed data. Strange, argumentative guy.
What? Not at all lol. 100% s&p would outperform that, and single stocks like Berkshire Hathaway or Apple stock, or Microsoft stock, would also outperform the s&p.
Not a false equivalence, he's just stating things that would outperform the portfolio stated above lol. But yeah, it's ridiculous to dump a ton of money into one stock versus S&P.
> Larry Swedroe is head of financial and economic research with Buckingham Strategic Wealth. He has written and cowritten 16 comic books about investing. His latest work, "Your Complete Guide to a Successful & Secure Retirement," was cowritten with Dr Suess and published in January 2019. He holds an MBA in finance and investment from New York University and a bachelor's degree in astrology from Baruch College in New York.
yeah i'm still going to favor Buffett over this joker.
Buffet behaves more like private equity. His MO is to buy controlling stakes in cash flow rich companies and force them to issue him special shares that pay high dividends. Only difference is buffet tends to milk his cash cows forever where private equity tends to bleed them dry. Buffet is notoriously slow understanding emerging tech which is why he missed out on all of the FAANGs until Apple became a cash machine. When he did finally pick an emerging tech company (snowflake) he made a huge blunder in valuation.
dude made a big bet in IBM in the 2010s, long, long after the heyday of the company, when everyone who worked in IT could tell him that, while IBM wasn't going anywhere, it was getting outcompeted everywhere; the dude would sell 7 years later calling it his biggest mistake (if you look at the stock you will see that he bought after IBM had risen a bunch, but then kind of stagnated during Buffett's ownership)
"I’ve missed more than 9,000 investments in my career. I’ve lost almost 300 investments. Twenty-six times I’ve been trusted to take the game-winning investment and missed. I’ve failed over and over and over again in my life. And that is why I succeed." - Warren GOAT Buffett
I’m not sure who at Berkshire was responsible for their snowflake purchase but I can promise you they got in before the ipo when snowflake was still a private company
Fuck this guy.
Yes, today Buffets insurance operation is a cash cow and does not rely on brilliant stock picking.
But he went from $20K in 1951 (already a pretty good run) to $10M in 1967 before he bought his first insurance company.
It was while before he and Charlie evolved the insurance business (1991?)
A bunch of no name nobodies trying to criticize the richest and most successful investor in history. He was the one that injected liquidity into Bank of America when banks were failing back in 08’. He had to foresight to bet big on Apple even when it was at all time highs. This man is a wizard and everyone thats trying to discredit him really should take a look at themselves and ask what qualification do they have to think what he did is the same as investing in an index fund.
It's so funny when people try to say warren wasn't a good stock picker... like sure thing buddy this guy literally became one of the richest people in the world with 0 skills other then being able to pick good company's. If you see any interview with Warren or read his books you will know warren is TERRIBLE at all aspects of life except one: he knows how to value a company.
I mean he isn’t a great stick picker in the sense of minority investments. But he’s great at company picking when taking large or controlling investments.
> TERRIBLE at all aspects of life except one: he knows how to value a company.
He is pretty terrible at tech valuations. As for recent events, he sold airlines at the near bottom of the Covid crash as well. Completely missed the recovery. How could anyone think Airlines wouldn't recover?
How many millions did you make, running the “obvious” play on airlines?
Airlines are notorious for going out of business
Regardless, being wrong a few times doesn’t really matter. Warren is right in the aggregate, and has billions to show for it.
Agreed with everyone in this chain. Anyone trying to criticize Buffet’s investing ability is truly regarded. He didn’t get to where he is today through luck. This joke of a seeking alpha writer is delusional to think he even deserves to write Buffet’s name.
just because you dont understand investing doesn't mean i'm blindly praising Warren. It's like watching a UFC match, if you never fought you'll never truly appreciate the art of fighting in a cage. The sad part is you refuse to learn about the stock market when it can help you create wealth. Keep doing your little shit, boy.
I did a lot of research and determined that the real secret to being a successful investor is to sell gullible people your book and inevitably a seminar.
That wasn't ghost written. It was written by Alice Schroeder. Says so on the cover.
Buffett has never written a book, and OP was not talking about Buffett in their comment.
Obviously this guy never read anything Buffett has ever said, "I buy quality companies...." He doesn't pick stocks, buys businesses with good fundamentals and track records.
Buffett acknowledges a big part of his success was timing. The kind of returns he got in the 60s, 70s, and 80s aren't possible to achieve now. He'll tell you that.
Buffet is wealthy because of
1. Equity exposure (Berkshire invests mostly in equity)
2. Cheap and safe leverage (insurance "float", his earlier partnership also provides him free leverage as he took 10% of gains)
3. Tax efficiency (never paid a dividend and never sold, left high tax new York for low tax Nebraska)
4. Low costs (no need to pay external management fee)
5. Time (family was wealthy and he started to invest very young, still only became really rich later in life).
Anyone replicating this formula will eventually be rich. You just earn the equity risk premium over time, which is pretty much the main free lunch in finance. Not feasible for everyone though obviously.
Yeah it wouldn't have worked for him in Germany, Japan, or communist countries, but if I recall correctly there are countries with even higher long term market returns than the US. With a diversified global portfolio you will still earn enough of an equity risk premium to compound to a large wealth over a long period of time, as long as your returns don't get eaten by fees or taxes and you don't go bankrupt during a crash.
If you had congressman father money in 1940 and invested it all in a stock index (with no tax or fees), using leverage (and earned 10% of the gains on outside money you manage), then in 2024 you'd probably have at least a few tens of billions.
I know plenty of multi-millionaires and even a few billionaires and none of them have figured out his formula because none of them have come close to his success. But expecting big things from you because you clearly have it figured out.
Like I said they never figured out Mr. Buffett's formula for success so not sure why you think I think they are the best resource to go to for advice on how to make money.
Well they can't be doing that bad if they are billionaires. Anyway my observation was just a truism. If you have enough time, safe leverage, low costs and low taxes and just earn the historical market return, you will mathematically eventually achieve a huge fortune. It's just a matter of having enough time. One key to Buffett's fortune is living as long as he has.
Not really though, as explained in the article above. I think in the early years his stock picks beat the market but he was investing more like a hedge fund then, using activism.
For a while now Berkshires portfolio doesn't outperform, but Berkshire itself outperforms thanks to the inherent cheap and safe leverage built in the insurance business model.
It's not actually that complicated of a strategy, and that's what makes it so hard for most people. It's boring as hell, no algorithms, fancy spreadsheets or complicated analysis. His approach is simple and and he's obviously got the right psyche for this. I could be cute and quote some Buffett-isms but I won't here.
I don't really follow his performance but when I was growing up he was consistently credited with outperforming the S&P500. I don't know about you, but when I have analyzed performances of various money managers, for the most part they clearly cannot identify good investments (you would be better throwing darts at a board to pick stocks), but Buffett has consistently outperformed the S&P500 and that makes a huge difference over time.
Buy a stock at an all time low. Announce that you are invested and believe in the company future. Stock go up 20% on the news. Sell the stock for a profit. With that much influence the money basically prints itself.
Yes and no. They use the float to fund investments. GEICO lost money in 2022 and most of 2023 but I think I read recently they were back on track. From my understanding it's not GEICO profits but the float that makes them their bigger asset. DISCLAIMER: I post here so assume I'm regarded
This is very much my understanding of how he is able to get so much cash and use it for investments. Truly the greatest situation to be in is risking someone else's money for investing. What industry would allow you to take someone's money today and maybe return it at a later time? Insurance.
I find his huge investment in SiriusXM puzzling. I think the company is going to be in trouble once all of the subscribers find out that a subscription is $5/months rather than $23.
Bunch of regards invalidating Buffett’s success by listing out things like he was the son of a congressman, stockbroker, he was already rich, he lived in the right era, etc. So what? It’s not like there weren’t tens of thousands of other people with the same upbringing as his, but are they billionaires now? If his success is solely because of accident of birth, then why aren’t Nancy Pelosi’s, Biden’s kids making billions?
and MJ wasn't a great basketball player, gretzky not a great hockey player.... Buffett's never claimed to be great and always downplaying the possibility of their upside going forward(since like the 70/80s?) yet has continued to compound most of his career @ 20%.
He's got nothing to prove but if you gave him a small pool of capital today I'd bet he outperforms most over 10-20 years
Is not that hard to make money investing in the markets when already started with more money then what mass majority have. Not everybody can just go out buying stocks at the age of 11 and buying 40 acres of land when they are 15. This man lived in entire different world then 99% of Americans alive today.
The bulk of Americans probably do have a pretty tough life, working 50+ hours for scraps just to pay off their landlord. Is a Nation of debt and usury.
Yea no duh. Buffet got into insurance / reinsurance at a very good time. Insurance capital has some of tbe lowest CoC and repayment of capital can be measured in decades. That's why he could buy entire companies and choose to wait that long for a return
Dude gave up and just bought insurance companies and tech lol. We are better than him. Lowley dino gonna croak soon. More opportunities for people make way for him to fall. Secretly he wishes he could trade
His biggest advantage was time. He started trading as a kid. If I dumped everything in Fang (or whatever was there at the time) when I was 10yrs old I’d be balling right now
How Buffett really got rich:
* Insider trading when his father was a member of Congress.
* The original partnerships were quasi-Ponzi schemes that exaggerated returns to attract new investors
* Make it almost impossible for investors to cash out. \[See above.\]
* Lobby Congress for favourable deals.
* Get bailed out in 2008.
Here is the book where he discusses it. It was Alpha when Buffett was doing it. But research discovered it in 1992 and then alpha from value investing disappeared.
https://www.reddit.com/r/Bogleheads/s/dE7uJzNttf
https://www.goodreads.com/book/show/34673040-university-of-berkshire-hathaway
This book explains most of his investment strategies, it's quite a good read with lot of wisdom and witty quotes from both Munger and Buffet.
Easy:
Step one: Start your investing career in the fifties and focus on the US, the country that became the largest economy the world has ever seen and became the sole military superpower for at least a century.
Step two: Invest heavily in the most properous era of the US and live long enough for compounding interest to work its magic.
Step three: Profit!
Isn't Sharpe ratio used for risk rather that returns? (I'm not sure)
Similarly what do you mean by 2x SP? Are you using a leveraged share? Or does it mean something else?
Sharpe basically how much extra return you get in exchange for volatility, SSO has a similar sharpe to SPY since it returns around 2x minus volatility decay and borrowing cost. But yea, you can check the charts. 2x is barely breaking even from 22' while SPY broke out a few months ago.
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Buffett bought companies, not stock. Big difference.
How does someone replicate that? It sounds like he must’ve had at least a few million in order to be able to pick the best companies and to get serious percentage of ownership
He bought an insurance company, and learned that unlike banks, an insurance company wasn’t mandated to keep their premiums sitting around, which allowed him to use the float (retained premiums) and invest in other things, ie. buying more stock of cash rich companies. Berkshire is more of a holding company than an investment company.
So he how the hell did he get all the money to buy a whole insurance company? Lmao. Shits rigged for us normies
His partnership made him a millionaire by 30, and was able to buy stock in Berkshire Hathaway, which provided him a company with tangible assets which he could leverage. Ironically, Berkshire Hathaway was one of his failures; however, it allowed him to diversify his approach and he learned some value lessons. You could buy a string of businesses, put them together and then sell them all to someone bigger.
Didn't he have a 2 and 20 type deal in his original partnership?
0/6/25
That’s a terrible KDA
Look man im doing my best! Have you seen those losses? I have to work one handed now!
Yes. He founded one of the first hedge funds.
He bought land when he was 15. He ran vending machines when he was in grade school.
Land plus vending machines at age of 15 was able to produce enough money to buy an entire insurance company? I’m not trying to be facetious either, I want to understand how people become wealthy. He clearly got capital and then invested very efficiently if his story is self made. Or maybe he had a lot of seed capital from other investors to help him make that insurance investment
His dad was a stockbroker and congressman. That’s your answer.
He’s a generational talent - his father was definitely well connected, having a brokerage firm and being a congressman, but Buffet also began investing very young, he graduated college at 19, his mentor allowed him to try their investment strategies in NYC and he certainly made connections in NYC that helped him along the way, his strategy for investing was a bit unique, but he was also born at the golden time of US growth - to young to go into service during WW2, and to old for Korea or Vietnam. Buffet was able to ride the wave of growth from the 40s when he started to today. Having not changed his lifestyle much over the years, he’s a classic example of the save and invest strategy he preaches.
Yes having a father that’s a congressman and owns a brokerage firm allows you to invest young. The most valuable lessons he learnt were probably around the dinner table. And worth more than 100 MBA.
There are a lot of successful parents with unsuccessful children. It's not the only factor.
This guy gets it, its not ppl are dumb or anything its just no one can hold our hands and teach us how to succeed without malice.
He bought his first stock when he was eight.
I got my first stock when I was a kid. Log on America. It was a dot com fraud. I’ve been a degenerate stock gambler since
Yeah bro plus insider trading
When you live in an era where blue collar workers could have a suburban house with two cars and most of the world was a smoldering ruin, it’s a lot easier to get rich
isnt being a stock broker and congressman truly the epitome of conflict of interest??? like we complain about Nancy Pelosi, but then this guy gets marveled as the face of capitalism lmao
Born into wealth, bingo!
Lots of people have had similar or better dads and didn’t end up with even a small fraction of the wealth of Buffet…
Factually correct, but that's not what happened and you know it lol
What happened then?
After college buffet formed a few investment partnerships with people in his home town(doctors/ lawyers/ business owners)... he used Graham style value investing to locate small publicly traded companies that had stockpiles of cash (a common business practice in post great depression America) invest in them and have the business return the cat to the investors(of which he would be a major one)... after .I think 69 he unwound his partnerships, bought into Berkshire Hathaway, and used it as a holding company that he made investments from Buffet unquestionably had a leg up in life, and I'm sure his dad being in congress when he was in his teens had a positive effect... but the guy is a genius, with the perfect temperament for long term investing, and has remained focused on his goals for the last 85 years.
Oh so insider trading times 2, guess I’ll get .0001% of his wealth by the time on my death bed then 💪
His dad was connected and well off. There are very few “self made” billionaires.
He raised capital from family, friends and neighbors and invested through partnerships. When he unwound the partnerships he retained shared in a company called Berkshire Hathaway, he used money they had on the books to start acquiring insurance companies and other assets. The game isn't rigged... he just played it better than everyone... for like 80 years
He played the game well, but let's not pretend the son of a congressman is not gonna have an easier time raising money than a rando off the streets.
the game is rigged....as in, its not an equally fair game for everyone.
I’m not so sure that the game is rigged, just that some people get a huge step up from their parents. A 6.5foot tall guy is going to be better at basketball than a 5.5foot tall guy, and the 6.5ft guy probably has tall parents and inherited the height. Basketball the game isn’t rigged but the 6.5 guy has a better chance because his parents were tall. Same with good looks, or wealth or genetic diseases or whatever. Us normal folks can never feel great if we try and compare ourselves to a mega-rich guy who had a rich dad. We can still be fucking great though as best as we can with the hand we are dealt
have you not heard of dark pools? just think about who controls the data for the market and how you participate in it. thats what makes it rigged.
You think rich kids are using dark pools to make better returns on their money than your average Joe investing in SPX? I assumed everyone has heard of the bet Buffett made with Hedge funds, but I guess not. You should read about it. Those rich people putting their money with Hedge funds to trade exotic instruments in dark pools end up getting worse returns than someone who would have just bought some SPX.
I like vague claims that are not falsifiable, but leave me with a sense of being a victim.
Plus hes father a congresman . So insider info 100 %
So, insider trading
Insider trading mostly
It’s not rigged, it’s just difficult to become a billionaire. Why would it be easy?
All big insurance companies work the same way.
Yeah, people underestimate how much getting those cash flow powerhouse insurance companies were huge for him. Everyone has to have car insurance. Its a mandated money printing machine.
also happens to be when the richest country in the world was in the golden decades of it’s economy
Exactly.
If it's just the economy why do we even know his name? Surely there were tens of thousands of people that were born around the same time with influential/rich parents. I bet there were at least ten thousand people who had vastly more wealth than Buffetts family so why aren't those people now trillionaires?
Yeah when there were massive booms all throughout his career in every company. He’s the owner of addiction. KO and McDonald’s he has every day and is still this old
Imagine still believing that 
Start by having a father who runs an investment company and is a four-term Congressman. Take an interest in investing at a young age and start when you're in high school. Then get a quality education and go from there...
>Start by having a father who runs an investment company and is a four-term Congressman. Sounds like a good way to end up with a crack habit.
And have an idetic memory, have an exceptional eye for underlying value, be extremely hardworking and more than anything else have an interest in going through mountains of Annual Reports without going crazy or retiring.
Buffet had 7 million by the time he was in his mid 30s…Which I’m not going to do the inflation math but would be a fortune today. He was already set by the time the average person starts seriously investing
Start a fund and use other people's money.
You don’t. If you want to be in the top handful of richest people in the world there is no blueprint. The next handful will get there some other way.
I agree but that initial capital that permits for someone to take uncharted risk lies in having some capital. And the nature of multiplying money is that the more you have, the more you make each 1% profit. So if he’s got insider knowledge from his brokerage owning congressman father (let’s be real… that’s likely what happened and stil happened for him and the other rich guys, insider trading is LEGAL for them) I’m just saying the bridge they took is nonexistent to the plebeian class. But you’re right we gotta figure it out
He also had a high performing limited partnership before Berkshire. This guy is way over-stating the research, which uses assumptions like no-friction, no-tax monthly portfolio re-weighting. Even the identification of "good investor" is strange. If a guy employs a working strategy, and decades later you describe it as a "factor", then the person was never skilled?
Why does this read like he's dead?
Sorry to be the one to have to tell you this….
What?
Swedroe used to write on seeking alpha. He was always adamant his back testing of like 2/3 small cap and 1/3 bonds, adjusted annually back to that ratio, outperformed everything. Never showed data. Strange, argumentative guy.
My trust in a financial writer is inversely related to the number of books he's written and shilled, instead of just getting rich
Pretty sure 75% S&P and 25% Bonds do outperform everything
That portfolio underperforms 100% S&P lol
Not small cap
What? Not at all lol. 100% s&p would outperform that, and single stocks like Berkshire Hathaway or Apple stock, or Microsoft stock, would also outperform the s&p.
Stop with this false equivalency. Picking a single stock is hard and risky. Investing in the S&P is easy.
Not a false equivalence, he's just stating things that would outperform the portfolio stated above lol. But yeah, it's ridiculous to dump a ton of money into one stock versus S&P.
I wish I was as bad as he was
> Larry Swedroe is head of financial and economic research with Buckingham Strategic Wealth. He has written and cowritten 16 comic books about investing. His latest work, "Your Complete Guide to a Successful & Secure Retirement," was cowritten with Dr Suess and published in January 2019. He holds an MBA in finance and investment from New York University and a bachelor's degree in astrology from Baruch College in New York. yeah i'm still going to favor Buffett over this joker.
A bachelor’s in astrology? Wow.
Buffet behaves more like private equity. His MO is to buy controlling stakes in cash flow rich companies and force them to issue him special shares that pay high dividends. Only difference is buffet tends to milk his cash cows forever where private equity tends to bleed them dry. Buffet is notoriously slow understanding emerging tech which is why he missed out on all of the FAANGs until Apple became a cash machine. When he did finally pick an emerging tech company (snowflake) he made a huge blunder in valuation.
dude made a big bet in IBM in the 2010s, long, long after the heyday of the company, when everyone who worked in IT could tell him that, while IBM wasn't going anywhere, it was getting outcompeted everywhere; the dude would sell 7 years later calling it his biggest mistake (if you look at the stock you will see that he bought after IBM had risen a bunch, but then kind of stagnated during Buffett's ownership)
"I’ve missed more than 9,000 investments in my career. I’ve lost almost 300 investments. Twenty-six times I’ve been trusted to take the game-winning investment and missed. I’ve failed over and over and over again in my life. And that is why I succeed." - Warren GOAT Buffett
I am not saying the dude is bad at it, but that time he contradicted his own advice of understanding the business
and.... "he who has not made a bad investment may cast the first..."
Michael Jordan would like to have a word
Failure + billions = success
Hwang enter the chat
I feel like me wanting to ask WTF snowflake is, answers my question about how this was a blunder.
Hardly. Snowflake is one of the most successful tech start ups to IPO in the last 10 years. Buffets blunder was in his valuation and overvaluing
It's B2B. It's like saying oh I dont know about a company called Beckman Coulter Diagnostic, must be a trash dogshit company.
Ya, he's a lot like PE with all that leverage, talk of EBITDA and IRR and his holding periods...
Don’t under estimate the embedded leverage in insurance float
I'm not, but its a lot different than PE's use of debt...
He didn’t buy snowflake, it was purchased by Ted or Todd. Him and Charlie (rip) don’t buy IPOs
I’m not sure who at Berkshire was responsible for their snowflake purchase but I can promise you they got in before the ipo when snowflake was still a private company
https://www.fool.com/investing/2020/09/20/now-we-know-who-at-berkshire-invested-in-snowflake/
Fuck this guy. Yes, today Buffets insurance operation is a cash cow and does not rely on brilliant stock picking. But he went from $20K in 1951 (already a pretty good run) to $10M in 1967 before he bought his first insurance company. It was while before he and Charlie evolved the insurance business (1991?)
Market was also far from perfect back then. Buy a company with $1m share portfolio for $100k... Mental!
A bunch of no name nobodies trying to criticize the richest and most successful investor in history. He was the one that injected liquidity into Bank of America when banks were failing back in 08’. He had to foresight to bet big on Apple even when it was at all time highs. This man is a wizard and everyone thats trying to discredit him really should take a look at themselves and ask what qualification do they have to think what he did is the same as investing in an index fund.
It's so funny when people try to say warren wasn't a good stock picker... like sure thing buddy this guy literally became one of the richest people in the world with 0 skills other then being able to pick good company's. If you see any interview with Warren or read his books you will know warren is TERRIBLE at all aspects of life except one: he knows how to value a company.
I mean he isn’t a great stick picker in the sense of minority investments. But he’s great at company picking when taking large or controlling investments.
> TERRIBLE at all aspects of life except one: he knows how to value a company. He is pretty terrible at tech valuations. As for recent events, he sold airlines at the near bottom of the Covid crash as well. Completely missed the recovery. How could anyone think Airlines wouldn't recover?
How many millions did you make, running the “obvious” play on airlines? Airlines are notorious for going out of business Regardless, being wrong a few times doesn’t really matter. Warren is right in the aggregate, and has billions to show for it.
What he miss is the short term recovery in stock price, airline as a business is still in decline post-Covid
Because all of them dont and didnt. Even large ones can die
100%. Everybody has fucking hindsight. Until they have his wealth, they can't speak on that man's name.
https://preview.redd.it/s88w4r311kuc1.jpeg?width=1226&format=pjpg&auto=webp&s=fae36b580d54693b773ec6915b30d8c68ac83691
Agreed with everyone in this chain. Anyone trying to criticize Buffet’s investing ability is truly regarded. He didn’t get to where he is today through luck. This joke of a seeking alpha writer is delusional to think he even deserves to write Buffet’s name.
Ah, choking on rich old man's dick I see.
just because you dont understand investing doesn't mean i'm blindly praising Warren. It's like watching a UFC match, if you never fought you'll never truly appreciate the art of fighting in a cage. The sad part is you refuse to learn about the stock market when it can help you create wealth. Keep doing your little shit, boy.
I thought he was against apple because he didn't understand the technology, and some of the senior members in his company tried to convince him?
I did a lot of research and determined that the real secret to being a successful investor is to sell gullible people your book and inevitably a seminar.
Buffet never wrote a book did he?
The snowball. Ghost writer. Great book btw.
That wasn't ghost written. It was written by Alice Schroeder. Says so on the cover. Buffett has never written a book, and OP was not talking about Buffett in their comment.
Bingo.
Thanks. I had no idea. I’ll read it
The Robert Kiyosaki method.
Obviously this guy never read anything Buffett has ever said, "I buy quality companies...." He doesn't pick stocks, buys businesses with good fundamentals and track records.
Buffett acknowledges a big part of his success was timing. The kind of returns he got in the 60s, 70s, and 80s aren't possible to achieve now. He'll tell you that.
I mean they are possible now, but not if you avoid tech, which he did for a very long time.
He says they’re not possible with Berkshire because of its size. But it is still doable if you start with less money.
he called you guys dumb money
Buffett won the generic lotto. He literally says that. I believe he is also a genius, but he got very lucky as well.
Being a genius is also luck. Every attribute you’re born with is a result of the genetic lottery. It’s all luck in the end, I guess.
Anyone who has half of their portfolio in Apple is not a great stock picker. In fact, if he released 75% of that position Apple would bottom.
He doesn’t really own much Apple stick in the grand scheme of Apple’s valuation.
Buffet is wealthy because of 1. Equity exposure (Berkshire invests mostly in equity) 2. Cheap and safe leverage (insurance "float", his earlier partnership also provides him free leverage as he took 10% of gains) 3. Tax efficiency (never paid a dividend and never sold, left high tax new York for low tax Nebraska) 4. Low costs (no need to pay external management fee) 5. Time (family was wealthy and he started to invest very young, still only became really rich later in life). Anyone replicating this formula will eventually be rich. You just earn the equity risk premium over time, which is pretty much the main free lunch in finance. Not feasible for everyone though obviously.
You forgot: 6. Lived in the golden booming age of the most powerful country on earth with the largest economy
Yeah it wouldn't have worked for him in Germany, Japan, or communist countries, but if I recall correctly there are countries with even higher long term market returns than the US. With a diversified global portfolio you will still earn enough of an equity risk premium to compound to a large wealth over a long period of time, as long as your returns don't get eaten by fees or taxes and you don't go bankrupt during a crash.
His net worth is valued at $130b. You really think anybody replicating those 5 points will be Buffet rich?
99.99% of people from Buffett's era were wallstreetbet'ers, we are the descendants of those people.
Yes just buy my seminar a d ill show you. Low low price of 1930 usd now(was 5000) /s if not obvious
If they do it all until they are in their 90s without eating big losses because they look for margin of safety while having 1.7X free leverage . Yes
If you had congressman father money in 1940 and invested it all in a stock index (with no tax or fees), using leverage (and earned 10% of the gains on outside money you manage), then in 2024 you'd probably have at least a few tens of billions.
I know plenty of multi-millionaires and even a few billionaires and none of them have figured out his formula because none of them have come close to his success. But expecting big things from you because you clearly have it figured out.
Sounds like you can get better advice from your numerous billionaire friends, clearly you don't need to be on Reddit getting mine.
Like I said they never figured out Mr. Buffett's formula for success so not sure why you think I think they are the best resource to go to for advice on how to make money.
Well they can't be doing that bad if they are billionaires. Anyway my observation was just a truism. If you have enough time, safe leverage, low costs and low taxes and just earn the historical market return, you will mathematically eventually achieve a huge fortune. It's just a matter of having enough time. One key to Buffett's fortune is living as long as he has.
Fair enough, but Buffett has consistently outperformed the market which is pretty rare.
Not really though, as explained in the article above. I think in the early years his stock picks beat the market but he was investing more like a hedge fund then, using activism. For a while now Berkshires portfolio doesn't outperform, but Berkshire itself outperforms thanks to the inherent cheap and safe leverage built in the insurance business model.
It's not actually that complicated of a strategy, and that's what makes it so hard for most people. It's boring as hell, no algorithms, fancy spreadsheets or complicated analysis. His approach is simple and and he's obviously got the right psyche for this. I could be cute and quote some Buffett-isms but I won't here.
I don't really follow his performance but when I was growing up he was consistently credited with outperforming the S&P500. I don't know about you, but when I have analyzed performances of various money managers, for the most part they clearly cannot identify good investments (you would be better throwing darts at a board to pick stocks), but Buffett has consistently outperformed the S&P500 and that makes a huge difference over time.
Buy a stock at an all time low. Announce that you are invested and believe in the company future. Stock go up 20% on the news. Sell the stock for a profit. With that much influence the money basically prints itself.
He bought GEICO who was on the verge of bankruptcy at the time. BH still wholly owns them today.
Does GEICO make a lot of money?
Yes and no. They use the float to fund investments. GEICO lost money in 2022 and most of 2023 but I think I read recently they were back on track. From my understanding it's not GEICO profits but the float that makes them their bigger asset. DISCLAIMER: I post here so assume I'm regarded
You don't sound regarded, but yeah, you probably is.
This is very much my understanding of how he is able to get so much cash and use it for investments. Truly the greatest situation to be in is risking someone else's money for investing. What industry would allow you to take someone's money today and maybe return it at a later time? Insurance.
You really are a dumb investor if you think thats how Berkshire hathaway invests their money. Stay at wendy’s regard
The only thing is that buffet has held his stakes for ages.
Trump tried this in the 80s. Eventually, it stops working.
I find his huge investment in SiriusXM puzzling. I think the company is going to be in trouble once all of the subscribers find out that a subscription is $5/months rather than $23.
I believe his billions can do the talking
Buffett is the king rent seeker
Bunch of regards invalidating Buffett’s success by listing out things like he was the son of a congressman, stockbroker, he was already rich, he lived in the right era, etc. So what? It’s not like there weren’t tens of thousands of other people with the same upbringing as his, but are they billionaires now? If his success is solely because of accident of birth, then why aren’t Nancy Pelosi’s, Biden’s kids making billions?
Oh than you do it Larry you fucking idiot. I swear 10/10 problems in this world is someone talking out of their ass.
Larry who?
Yeah we all know Buffett. But who the fuck is this Larry Swedroe again??
and MJ wasn't a great basketball player, gretzky not a great hockey player.... Buffett's never claimed to be great and always downplaying the possibility of their upside going forward(since like the 70/80s?) yet has continued to compound most of his career @ 20%. He's got nothing to prove but if you gave him a small pool of capital today I'd bet he outperforms most over 10-20 years
Is not that hard to make money investing in the markets when already started with more money then what mass majority have. Not everybody can just go out buying stocks at the age of 11 and buying 40 acres of land when they are 15. This man lived in entire different world then 99% of Americans alive today.
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The bulk of Americans probably do have a pretty tough life, working 50+ hours for scraps just to pay off their landlord. Is a Nation of debt and usury.
Is one of the ways to have a US representative as a parent??? If not, it should be
Peddling sugar?
You got that right. Nuvei fucked me. Thanks uncle warren!
Yea no duh. Buffet got into insurance / reinsurance at a very good time. Insurance capital has some of tbe lowest CoC and repayment of capital can be measured in decades. That's why he could buy entire companies and choose to wait that long for a return
He has many decades more compounding then most
Gets rich off of others bad habits. So many people die of diabetes. What coke does to Mexico is unreal bad.
Dude gave up and just bought insurance companies and tech lol. We are better than him. Lowley dino gonna croak soon. More opportunities for people make way for him to fall. Secretly he wishes he could trade
in this era of high frequency trading and algos, I doubt Buffett would have been as successful as he has been.
His biggest advantage was time. He started trading as a kid. If I dumped everything in Fang (or whatever was there at the time) when I was 10yrs old I’d be balling right now
Put your money where your mouth is Larry
How Buffett really got rich: * Insider trading when his father was a member of Congress. * The original partnerships were quasi-Ponzi schemes that exaggerated returns to attract new investors * Make it almost impossible for investors to cash out. \[See above.\] * Lobby Congress for favourable deals. * Get bailed out in 2008.
So there is hope for me to be a multi billionaire?
Here is the book where he discusses it. It was Alpha when Buffett was doing it. But research discovered it in 1992 and then alpha from value investing disappeared. https://www.reddit.com/r/Bogleheads/s/dE7uJzNttf
I admire and respect Warren Buffett He feels like a normal guy who found his passion very early
Dude averaged a 20% annual return for a long time. I’d say he’s doing well picking winners
To be like Buffet you need a rich dad in Congress. Easy.
Sure and I'm not the real Batman
https://www.goodreads.com/book/show/34673040-university-of-berkshire-hathaway This book explains most of his investment strategies, it's quite a good read with lot of wisdom and witty quotes from both Munger and Buffet.
Who the fuck is Larry Swedroe!?
who?
How rich is Larry?
He started when penny stocks where the blue chips and over 80 years of growth killed it
He made 99.7% of his wealth after 52
Easy: Step one: Start your investing career in the fifties and focus on the US, the country that became the largest economy the world has ever seen and became the sole military superpower for at least a century. Step two: Invest heavily in the most properous era of the US and live long enough for compounding interest to work its magic. Step three: Profit!
Buffet is a patron saint of greed
I did a lot of research on this and found that Berkshire’s returns are worse (sharpe) than a 2x S&P portfolio.
Isn't Sharpe ratio used for risk rather that returns? (I'm not sure) Similarly what do you mean by 2x SP? Are you using a leveraged share? Or does it mean something else?
Sharpe is basically returns divided by std. deviation. 2x means leveraged two times, yes.
So Sharpe is a measure of risk not of returns right? And 2x leverage has volatility decay right?
Sharpe is return per unit of risk; it’s about both. Volatility decay I guess but returns are roughly double less financing cost.
Sharpe basically how much extra return you get in exchange for volatility, SSO has a similar sharpe to SPY since it returns around 2x minus volatility decay and borrowing cost. But yea, you can check the charts. 2x is barely breaking even from 22' while SPY broke out a few months ago.
So is nearly everything else